The Bank for International Settlement (BIS) has earlier this month, released an annual economic report 2019 and Facebook’s newly announced cryptocurrency project, Libra has somehow made the list of hot discussions.

The Bank for International Settlement is an international financial institution owned by central banks which “fosters the International monetary and financial cooperation and serves a bank for central banks”.

In their 2019 economic report released earlier this month, the organization seemed to have focused on the endeavors of big tech companies like Facebook, Alibaba, Amazon, Google, and Tencent which have either planned to or are actively employing the use of the blockchain to provide financial services.

Facebook’s Libra must have caught the most attention as its business proposition of helping over 1.7 million unbanked people around the world to get financial services was used as the basis of their discussions.

BIS proposed according to the report that big tech companies such as were mentioned are usually heavy on user data and can take advantage of the situation to make drastic changes to the current financial ecosystem.

According to the report,

“Given their size and customer reach, big tech’s entry into finance has the potential to spark rapid change in the industry. It offers many potential benefits. Big tech’s low-cost structure business can easily be scaled up to provide basic functional services, especially places where a large part of the population remains unbanked. Using big data and analysis of the network structure in their established platforms, big techs can access the riskiness of borrowers, reducing the need for collateral to assure repayment…”

Facebook recently made public the proposed launching of their global crypto project. Libra, as the project is often referred to, is the new worldwide cryptocurrency which is supported by over 25 top companies in the technology industry. The project, as planned will be launched next year as it seeks to help an estimated 1.7 billion people around the world who have no access to banking services. The project aims to provide this set of people and many others with financial services.

However, BIS’s financial report analyzed some potential risks associated with the provision of financial services by big tech companies. The document states that while the roles of these companies in financial are indispensable, the corresponding disadvantages and risk posed to the society cannot be overemphasized. According to the report,

Big tech’s roles in financial services bring efficiency gains and lower barriers to the provision of financial services, but the very features that bring benefits also have the potential to generate new risks and costs associated with market power. Once a captive ecosystem is established, potential competitors have little scope to build rival platforms.